Economic pressures have pushed third-party administrators to proactively market to potential employer-clients. With an increasingly complicated regulatory environment, TPAs are demonstrating their worth with enhanced marketing techniques.
"The TPA industry has been impacted by the economic downturn like everyone else, because for the most part they are small business and their clients are [mostly] small businesses. So the recession is causing difficulty for their clients, and that's going to trickle back to the TPA," says Deb Rubin, vice president of Transamerica Retirement Services and head of third-party administrator channel distribution.
Historically, TPA firms attracted new clients through referrals by partnering with financial advisers, CPA firms or local ERISA counsel. They relied on one-on-one relationship development marketing, says Rubin.
"Now the bigger firms are hiring consultants, and many firms are looking for a solution created by a lot of their vendors and partners," she explains. "I think that a lot of TPAs historically have not been very focused on marketing. In many cases, they succeeded because of their value proposition in the marketplace, almost in spite themselves."
Despite the poor economic climate, small and midsize employers are finding TPA services essential to keeping their employee benefits and day-to-day business practices in order. Perpetual and complicated government regulations require plan sponsors' attention, and TPAs provide the "hands-on, ongoing interaction" they require to stay compliant, adds Fred Hunt, active past president of the Society of Professional Benefit Administrators.
"The key to TPA success has always been that TPAs provide intimate, personalized services to client-employers and plans. This means lots of hand-holding and assistance in understanding and gearing up for new laws, requirements and concepts as they will best fit for that particular employer or workforce," he says.
Says Rubin: "Regulations probably help [TPA firms] out, that is their value proposition in marketplace. A lot of the regulations and disclosures coming down from various governmental agencies are things that TPAs have always done, so for them, this is really business as usual. It's nothing that is causing them any concern."
Daniel Dugan, president and CEO of North America Administrators, explains that "with the fully insured rates increasing in many markets well over double digits, more employers are looking for an alternative. The self-funded market is offering no-new-laser options with a cap on renewal premium increase as well as aggregate-only products that have opened the eyes of many employers; some who were self-funded in the past went fully insured a few years ago and now are coming back to the self-funded marketplace."
Moving beyond referrals
Business slowed slightly in the last few years for St. Louis-based TPA Benefit Plans Plus LLC, and it needed to find new clients to grow their business. Lots of employers can no longer afford to make the contributions that they've made in the past. A TPA can explain other options available to clients from a plan design perspective. Customization is inherent to the industry, so although this is not new to TPAs, custom plan design is how they sell their services to potential clients.
"We rely heavily on referrals, but in addition to that, we've developed some other marketing campaigns to try to get our name out there in front of our potential clients," says Julie Martin, retirement plan specialist and business development supervisor for Benefit Plans Plus.
Her firm sends out an award-winning newsletter for small-business owners that targets not only retirement issues, but daily business advice as well. This includes social media campaigns that their clients could use in their own workforce or "things we think they could find useful in their own business outside of their own retirement plan," she says.
They send the newsletter to current clients, prospective clients, referral sources and vendor partners. In addition to this and a postcard campaign, the firm often asks a carrier or financial adviser if they can accompany them to employer meetings with potential clients.
They also use social media to spread the word. They broadcast their newsletter on Facebook and have a LinkedIn group, where "we probably get the most traction," she says. Employers may also find LinkedIn a good place to research firms as they can easily connect with different people in the industry.
Montana-based TPA Employee Benefit Management Services, Inc., "employs an integrated marketing strategy that supports a value-based sales process, value-touch marketing and channel optimization, and is aligned with the organization's strategic goals and objectives," says LynAnn Henderson, director of marketing and community relations.
EBMS continues to use traditional channels of marketing, such as in-person marketing with brokers and employers, e-newsletters, direct marketing, trade shows, regional seminars, a website, referral harvesting, webinars, and an annual health and benefits conference that is a customer loyalty event.
They too are integrating social media platforms into their marketing strategy, including Facebook and LinkedIn, and plan to "incorporate apps designed to spotlight the organization from the crowd, increase the number of fans, generate interest with offers and products, and turn fans into customers," says Henderson.
The TPA Choice program produced by Transamerica Retirement Services aims to help TPA firms close more deals and demonstrate plan customization to potential clients.
Their most sought after program, TPA Advantage, "gives the TPA, usually a small business, the kind of marketing support you would get in a large corporation, which they are certainly not used to," says Rubin.
It is available to TPAs that do the most work with Transamerica Retirement Services. In the first year a TPA qualifies for the program, a marketer visits them and develops a plan for client outreach.
They redesigned logos, the website and marketing brochures for one TPA client and "work[ed] with them to create local marketing efforts designed at their referral services to tell their story and get more exposure to these primarily financial advisers," says Rubin.
One TPA firm in Ohio wanted TRS to produce a video that the TPA could use in multiple ways, such as on their website and streaming in the waiting room.
Rubin said the client was very excited with the result, exclaiming, "'What you did for me was far more than the money you saved me. I would not have known even where to begin. You took all the pain away from me and helped me to achieve a goal that I've wanted to do for a long time, but I didn't know how to,'" she says.
"Preparing a custom retirement plan design for your business [is imperative] to make sure that you have the right plan in place for you, not just the investment piece and the employee education, which are very important, but we feel the first step is to make sure that you have the right plan in place that's meeting your goals," explains Martin.
Five factors to consider when choosing a TPA
Henderson from EBMS suggests employers consider five factors when looking for a TPA:
1. Cost. Can the TPA help the employer improve the personal and fiscal health of its organization? What measures does the TPA take to minimize both claim costs and administrative costs?
2. Flexibility in plan design and service. Third-party administration is a service industry, and the client's wish should be the TPA's command (within the limits of law, common sense and any extra costs incurred).
3. Legal compliance. Each year, there are about 1,500 new laws, regulations and official opinions issued by about 150 different governmental entities regarding employee benefit plans. TPAs started 30 years ago with the specific goal of being highly informed on how to guide clients through the legal maze. As a result, TPAs spend about 40% of their time on government compliance for client plans, a cost that should be factored in when pricing the TPA's services.
4. Hardware, software, personnel, capacity and experience. Does the TPA have the ability to handle the needs of the employer in question?
5. Performance guarantees. Employers may want to ask a TPA about some form of performance guarantee based on speed and accuracy of processing claims and other customer service measurements.
15 questions plan sponsors should ask prospective TPAs
To find the TPA that best fits your organization, LynAnn Henderson, director of marketing & community relations, Employee Benefit Management Services, Inc, a Montana-based TPA, offers 15 questions employers should ask before deciding on a firm.
1. What is the TPA's value proposition?
2. What is its experience and reputation? (expertise, industry experience).
3. What are its core values and "principles of transacting business?"
4. Does the TPA have other clients of similar size and needs? If so, ask for references.
5. What is the TPA's strategy for success?
6. How does the organization stay abreast of industry and compliance issues that impact its customers?
7. What capabilities does the TPA have to help clients comply with health care reform and ensure customers understand its implications?
8. How does the organization deliver value to clients?
9. What specific processes, programs and services are available to manage claims?
10. What specific resources, including online decision-support tools, health coaching and communications, are employed to engage consumers in healthy behaviors?
11. How fast does the TPA pay claims? What is its error rate?
12. Does the TPA keep a careful eye on the medical component of claims through such strategies as bill review, medical case management and pharmacy benefit management?
13. How does the TPA or their PBM approach and manage pharmacy expenses?
14. Is there a utilization management program in place to safeguard against unnecessary and inappropriate medical care rendered to employees? Does the program include preauthorization and case management?
15. Does the TPA have recovery and subrogation capabilities, litigation management and special investigation capabilities?
